21st Century Energy Markets: opening statement highlights

Below are highlights from the two opening statements given at a US Subcommittee on Energy and Power Hearing on ‘21st Century Energy Markets: How the Changing Dynamics of World Energy Markets Impact our Economy and Energy Security on March 3 2015.

Honourable Ed Whitfield

“When it comes to energy markets, the transformation over the last decade has been dramatic. In fact, several longstanding energy trends have completely reversed themselves. America has gone from declining oil and natural gas production to unprecedented increases that now make us the world’s largest energy producer and a potential exporter. As a result, fears about rising import dependence and skyrocketing energy prices have been replaced with surging domestic supplies that are driving down prices, so low in fact that they are now discouraging additional drilling in the US.

“The downstream changes have been every bit as dramatic. Domestic refineries, a number of which were optimised to handle imported crude, now have the option of transitioning to use more North American oil. And for manufacturers, the offshoring trend has stalled, and in fact some of the manufacturing capacity that had been forced overseas by competitive pressures is now returning to the US because of the low energy prices. And North America’s new energy supplies have necessitated a major infrastructure build out in order to deliver this energy to the consumers and businesses that need it.

“The changes also have significant geopolitical implications. Many of our energy importing allies were resigned to growing dependence on OPEC and other unfriendly exporters like Russia, but now they see America as a potential new source of reliable and affordable energy supplies. As a result, American has the opportunity to fight back against the geopolitical influence of the countries that used to dominate global energy markets, and exert our own influence instead.

“There is no question that the America’s oil and natural gas boom has been very good news for America, but that is not to say that it doesn’t bring new concerns, we have simply traded one set of challenges for another. Unfortunately, our energy policy is largely based on old laws rooted in assumptions of scarcity, and may no longer be up to the task of addressing these new challenges and taking full advantage of emerging opportunities.”

“Today, we continue the discussion by further exploring current and evolving energy market dynamics. We hope to be able to better assess where we are and what new policies may be needed. Our existing energy policy was not created overnight, nor will any change to it happen overnight. This will be a thorough and deliberative process, and one in which all affected parties will be heard.”

Honourable Fred Upton

“Energy markets are changing, and they’re changing for the better. America is producing more while using and importing less, and the energy boom is translating into a jobs boom, not just in energy production but also energy infrastructure and manufacturing. The combination of increased domestic oil supplies and decreased demand not only strengthens our energy security, but also presents new opportunities for energy diplomacy. The days of energy exporting aggressors like Russia exerting uncontested geopolitical influence may be numbered now that America is emerging as an energy superpower.

“While the overall effects of our domestic energy abundance are overwhelmingly positive, they do create some challenges and complications when viewed under the lens of our existing federal energy policy. For example, the recent drop in oil prices has been great news for folks in Michigan and across the country who are finally getting a break at the gas pump after several years of prices above three bucks a gallon. But at the same time, current prices pose a challenge for producers, their employees, and the communities in which they live. In fact, some energy workers have already lost their jobs.

“Couple these changes with a new global petroleum landscape of enduring complexity and emerging volatility, and it only further reinforces the point that the time to examine these issues is now. Clearly, the changes in energy markets affect different parties in different ways, and Congress needs to be aware of all of the impacts before considering any modifications to energy policy.”

“When it comes to revisiting the 40 year old restrictions on oil exports, we will take the same deliberative approach. We recognise that the export of oil and other liquid hydrocarbons presents different issues than natural gas. That is why we again are undertaking a thorough review and will consider all perspectives, including producers, refineries, and consumers. That is the purpose of today’s hearing and also why we are soliciting public comments on changing energy markets. If we choose to change the law on exports of oil and other liquids, it will only happen after an open review of the current policy.

“America’s energy abundance has greatly changed energy markets and presents a number of new opportunities, and we will carefully consider our approach to all of them.”